European stocks stagnate as defensive stocks offset growth fears

The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, August 19, 2022. REUTERS/Staff

Aug 24 (Reuters) – European stocks were little changed on Wednesday as a rise in defensive stocks countered concerns over a looming energy crisis and bleak growth prospects, while hawkish comments from some U.S. Federal Reserve officials also mastered the feeling.

The pan-European STOXX 600 (.STOXX) held steady in choppy early trading, hovering near one-month lows and weakened by a 1.2% loss among miners.

Defensive sectors, including utilities (.SX6P), led the gains.

The benchmark fell for three straight days through Wednesday as markets priced in rising interest rates, gloomy economic data, high inflation and a potential recession.

Additionally, European benchmark gas prices have tripled in just over two months as a winter of unreliable energy supplies from Russia looms. Read more

“There was a strong rally in global equities earlier led by the United States which dragged Europe down with it, but the European outlook is still very challenging,” said Graham Secker, chief European equity strategist at Morgan Stanley.

“As we enter Jackson Hole, the market is starting to reprice this rally, thinking the Fed is always going to stay hawkish, so we are seeing some profit taking.”

Investors were cautious ahead of the symposium after Minneapolis Federal Reserve Chairman Neel Kashkari on Tuesday reiterated the Fed’s focus on controlling inflation above all else. Read more

“Europe’s inflation expectations continue to rise while growth expectations deteriorate, so the fundamentals continue to get tougher for equities,” Secker said.

Yields on German 10-year government bonds hit a new 8-week high as inflation fears bolstered expectations of aggressive monetary tightening.

The market was also focused on the minutes of the European Central Bank’s latest policy meeting scheduled for Thursday which should look hawkish.

Among the shares, Richemont (CFR.S) rose 2.4% after the company announced that Farfetch (FTCH.N) would acquire a 47.5% stake in the loss-making online fashion retailer of the product group. luxury brand YOOX Net-A-Porter and that Alabbar would take 3.2%. Read more

Bavarian Nordic (BAVA.CO) added 2.5% after the Danish biotech company said it was doing “everything possible” to meet high demand for its monkeypox vaccine around the world while maintaining its business outlook for the year. Read more

Reporting by Anisha Sircar in Bangalore; Editing by Sherry Jacob-Phillips and Anil D’Silva

Our standards: The Thomson Reuters Trust Principles.